Economics Killing Mother Nature

For 40 years some economists have known boosting GDP was perverse and suicidal — i.e. Hurricane Katrina was great for the US economy — and is laying waste to the planet’s ecosystems

By Stephen Leahy

BONN, May 30 (IPS) – The global biodiversity crisis that threatens life on Earth is driven by economic policies that fail to value nature, a new report finds.

It took the 2006 Stern Review to convince business and governments that combating climate change would be far less costly than ignoring it. Now another “Stern-like” report pegs the ecological damage to the planet’s land areas every year at 78 billion dollars due to ongoing loss of biodiversity.

“The developing world will never catch up with the developed world at the current level of biodiversity loss,” said Pavan Sukhdev, the lead author of the report and head of Deutsche Bank’s global markets business in India.

“Poverty cannot be eliminated with the continuing decline in ecosystem services,” Sukhdev told IPS at the meeting of the U.N. Convention on Biodiversity here (CBD), where an interim version of the “The Economics of Ecosystems & Biodiversity” report was released Thursday. More than 6,000 representatives from over 70 nations are in Bonn concluding 12 days of negotiations on how to protect biodiversity.

Environmental groups praised the report, with WWF International calling it “a long overdue recognition of biodiversity as a key development issue”.

Biodiversity is a collective term for all living species — what is more broadly termed nature. Nature provides us with services such as food, fibre, clean water and air, but these are not valued under our current economic system and as a result, it is frequently profitable to destroy those services for short-term gains, the report says.

Business as usual will result in the loss of wildlands the size of Australia — more than 7.5 million square kilometres — by 2050. In no more than a generation, 60 percent of coral reefs will be gone, devastating the 80- to 100-billion-dollar fishery industry and eliminating the prime source of protein for nearly a billion people, Sukhdev told government ministers at the CBD plenary. Those losses will likely total trillions of dollars, he said.

“We are still struggling to find the value of nature,” Sukhdev said. “This lack of valuation is, we are discovering, an underlying cause for the degradation of ecosystems and the loss of biodiversity.”

The CBD study, commissioned by the European Union (EU) and the German government, is the largest ever assessment of the economic impact of ecological damage. Nor surprisingly, it found that the poorest people and countries were the most directly dependent on nature’s services and will thus be most affected by the continuing loss of biodiversity.

Haiti is a textbook example of the importance of biodiversity. By cutting down virtually all of its forests for fuel, the country lost much of its topsoil due to erosion. It suffers from devastating floods because there is little to hold the water back. Ninety percent of Haiti’s children suffer from waterborne diseases and intestinal parasites because there is no forest or riparian areas to clean the water, Sukhdev said.

“The Millennium Development Goals cannot be achieved without halting and reversing losses of biodiversity,” he stressed.

The Millennium Development Goals are global targets agreed to by every country to halve extreme poverty, halt the spread of HIV/AIDS and provide universal primary education, among other targets, by 2015.

For more than 40 years some economists have known that traditional measures of gross domestic product (GDP) and the like ignore the reality and value of nature’s services. Under this perverse system, the devastation wrought by Hurricane Katrina and the Asian tsunami were products of boosted global GDP.

Some have known the complete focus on GDP by policymakers and global industry “cost us dearly in terms of unsustainable growth, degraded ecosystems, lost biodiversity and even reduced per-capitia human welfare, especially in developing countries,” the report states. But few economists were brave enough to jump into the highly complex and ethically tricky business of putting a dollar value on Mother Nature.

Sukhdev said this is not an attempt to reduce nature to mere dollars and cents. “Nature has important cultural and spiritual values,” he added. Rather, he explained, it is an effort to put an economic value on nature’s services to bring some reality into the current economic fiction that is running the world.

For full story see The Dollars and Sense of Conservation

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